Latest / Elon Musk Podcast / SpaceX and xAI Merger This Week? Inside Musk's $1.5 Trillion Gamble

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SpaceX and xAI Merger This Week? Inside Musk's $1.5 Trillion Gamble · Elon Musk Podcast

• 0:02
  So what if I told you that by the end of this week, Elon Musk
• 0:05
  might announce the largest corporate merger in the history
• 0:09
  of all humankind? He'd combined SpaceX, XAI,
• 0:14
  possibly Tesla into a single entity worth 1 1/2 trillion
• 0:20
  dollars. And according to Bloomberg,
• 0:22
  those talks are happening as we speak.
• 0:25
  SpaceX and XAI are in what sources describe as advance
• 0:29
  talks on a deal that could fundamentally reshape everything
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  we know. And this might just be the
• 0:36
  opening move. So here's what we know what's
• 0:39
  going on. I'm going to walk you through
• 0:43
  what we actually know about this deal.
• 0:45
  Why some people think it's the birth of a new Berkshire
• 0:48
  Hathaway. My others are comparing Musk to
• 0:50
  Howard Hughes. There's also a wild theory about
• 0:53
  space based data centers. Sounds insane until you realize
• 0:57
  Musk is actually into this, and we'll go right into that after
• 1:01
  this very short break. Now, let's talk about the
• 1:05
  numbers first, because the financials that just leaked are
• 1:08
  insane. SpaceX brought in roughly $8
• 1:11
  billion in profit last year on somewhere between 15 and 16
• 1:15
  billion in revenue. That's private company.
• 1:18
  In the rocket business, that's very unheard of.
• 1:21
  Those figures came out Friday via Reuters, and they help
• 1:24
  explain why SpaceX is reportedly considering raising as much as
• 1:28
  $50 billion in an IPO that could value the company at 1 1/2
• 1:33
  trillion dollars. Now, to put that into
• 1:35
  perspective, that makes SpaceX worth more than most countries
• 1:39
  entire stock markets. The majority of that revenue
• 1:42
  comes from Starlink. That's the satellite Internet
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  constellation that now has 9 million subscribers.
• 1:49
  It's a business that didn't exist five years ago. 9 million
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  subscribers. SpaceX also makes money
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  launching payloads for governments, NASA, and other
• 1:57
  companies. But Starlink is the cash cow
• 1:59
  driving everything else right now.
• 2:02
  Now this is where it gets very interesting.
• 2:05
  The merger talks aren't just about SpaceX and XAI.
• 2:09
  There's rumors and rumbles suggesting Tesla could also be
• 2:14
  folded into the structure. Tesla has already invested 2
• 2:18
  billion in XAI, and when this speculation started circulating
• 2:22
  late last week, Tesla stock surged over 3% in a single day.
• 2:27
  I just rumors and the investors are very happy if this happens,
• 2:32
  right? So what's the actual vision
• 2:34
  though? We don't really know, but let's
• 2:36
  try to figure this out. Bloomberg laid it out pretty
• 2:39
  directly. Musk's many obsessions are
• 2:42
  converging. The idea would be to launch
• 2:45
  solar powered data Centers for AI into space.
• 2:49
  You need rockets to get there. SpaceX, Starship.
• 2:52
  You need solar panels and energy storage.
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  Tesla. You need the EI systems to run
• 2:58
  in those data centers. XAI.
• 3:01
  If you wanted to build orbital computing infrastructure, you
• 3:03
  would need all three companies working together, and Musk
• 3:06
  happens to own all of those now. Is that the real plan?
• 3:10
  I genuinely don't know. It sounds like something out of
• 3:13
  a Neil Stephenson model. I genuinely do not know, but
• 3:17
  it's also exactly the kind of thing Musk would attempt.
• 3:21
  The man landed rocket boosters on drone ships when everyone
• 3:25
  else said it was impossible. Starship is going to fly to
• 3:28
  orbit soon. He built an EV car company when
• 3:31
  even legacy automakers said the battery is weren't even ready to
• 3:34
  go. And so betting against Musk
• 3:37
  technical ambitions has historically been a losing
• 3:40
  preposition. Now, I've been digging through
• 3:42
  the analytics of this show and noticed that 37% of you are
• 3:46
  following the channel. And for you, I'm forever
• 3:48
  grateful. And the other 63% haven't hit
• 3:50
  the follower subscribe button. And you've probably listened to
• 3:53
  the show before and you liked it.
• 3:55
  And I've been an independent journalist coming Elon Musk,
• 3:57
  Space Flight, AI and tech for the last six or seven years.
• 4:01
  And I'm going to continue for the next 10.
• 4:03
  And all I ask from you is one second of your time to hit the
• 4:06
  follower subscribe button on the platform you're watching or
• 4:08
  listening on right now. I'm extremely grateful and
• 4:11
  blessed to have you in this community.
• 4:13
  So thank you for hitting that button.
• 4:15
  OK, back to the story. Let's talk about the bull case
• 4:18
  because it's genuinely wild. One analyst called this move a
• 4:23
  master class in leverage. The merger achieves 3 things
• 4:27
  simultaneously. First, it gives XAI a clean path
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  to public markets without attempting A risky standalone
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  IPOAI companies are notoriously difficult to value right now and
• 4:37
  going public attached to Space XS proven revenue base is much
• 4:41
  safer. Second, it potentially converts
• 4:43
  stagnant Twitter equity into high growth exposure.
• 4:47
  More on Twitter in a minute. Third, it creates the stack
• 4:51
  intelligence through XAI distribution through Starlink
• 4:55
  infrastructure through SpaceX, all on one cap table.
• 5:00
  Now, the Berkshire Hathaway comparison keeps coming up, and
• 5:03
  I understand why. Warren Buffett built his empire
• 5:05
  by acquiring diverse businesses that generated steady cash
• 5:08
  flows. The idea is that Musk could it
• 5:11
  do something similar, but with his own technology companies
• 5:14
  positioned to define the next century.
• 5:17
  Vertical integration across rockets, AI, satellites, and
• 5:20
  possibly Tesla EVs, too. It's kind of crazy.
• 5:24
  But here's the bear case, and it deserves serious consideration.
• 5:29
  You can compare Musk to Buffett, but also to Howard Hughes.
• 5:33
  In a way, that's what a Bloomberg columnist did.
• 5:36
  It's a pointed reference. Hughes was a brilliant aerospace
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  pioneer who built incredible machines, who was also erratic,
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  ultimately became a recluse, and his business empire fragmented
• 5:47
  after he died. Now they argue that Musk's
• 5:50
  motivations for combining these companies might be pretty
• 5:53
  pedestrian. Control, financing, subsidies,
• 5:56
  more money. Not grand vision, just practical
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  corporate maneuvering dressed up in some crazy science fiction
• 6:03
  language that he talks about. Something like Foundation Right
• 6:08
  now the industrial logic is pretty questionable.
• 6:11
  If you're sceptical, I'd like to stay kind of sceptical about
• 6:15
  these things. Sometimes I'd like to think not
• 6:19
  on any team, but to look at the whole process here are arrows.
• 6:26
  Are space based data centers actually the plan or is that
• 6:30
  just a story to justify this deal?
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  Musk has a history of announcing spectacular visions that arrive
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  years, maybe decades late. They're modified, possibly not
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  at all. Full self driving, that's always
• 6:44
  two years away. Just think about that.
• 6:46
  Maybe the space data center concept is real.
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  Maybe it's justification after the fact for a financial
• 6:52
  engineering exercise. But maybe that's going to be two
• 6:55
  years away every year. I don't know.
• 6:57
  We're going to have to see combining these companies would
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  concentrate an extraordinary amount of power in one person's
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  hands. Rockets that launched national
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  security payloads, satellite Internet serving 9 million
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  people that he could turn off anytime he wants to, an AI
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  company training large language models and more.
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  A potential Tesla, one of the most valuable automakers and
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  robotics companies. That's a lot of leverage for any
• 7:23
  person to hold. Now let me tell you about this
• 7:27
  other interesting angle, the Twitter redemption arc.
• 7:31
  When Musk bought Twitter for $44 billion in 2022, everyone,
• 7:36
  including me, thought it was stupid.
• 7:39
  A disaster, right? The acquisition looked
• 7:42
  impulsive. The debt load was huge.
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  Most advertisers just left the platform.
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  People that worked there took off and went to other Fang
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  companies. For years, the conventional
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  wisdom was that Twitter represented Musk's biggest
• 7:57
  mistake. But what if that's all wrong?
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  If X equity gets rolled into this combined SpaceX and XAI
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  structure, suddenly it's different.
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  Twitter wasn't chaos, it was the final piece of a larger puzzle.
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  Think about what you'd control with this combined entity.
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  Communication through X intelligence through XAI.
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  Distribution of that information through Starlink's global
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  satellite network and the infrastructure to launch that
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  communication network with SpaceX.
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  Vertical integrated stack for the future.
• 8:38
  That's I think that's what Musk is doing.
• 8:40
  I I don't know though. I'm not saying this was Musk's
• 8:43
  plan all along. I don't even know if Musk knew
• 8:45
  this was the plan all along. But intent also doesn't matter
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  at this point. The pieces are on the board and
• 8:51
  he's in a position to combine them all to make this mega Corp.
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  So where does this leave us all? The deal could be announced this
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  week, and it also might fall apart.
• 9:00
  There might not be a deal at all.
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  Corporate mergers of this scale are incredibly complex.
• 9:07
  This could take a decade for shareholders to satisfy,
• 9:11
  regulators to navigate, and also nothing is guaranteed.
• 9:16
  But here's what I keep coming back to, whether you think this
• 9:19
  is visionary or crazy recklessness, whether you see
• 9:23
  Buffett or Hughes, Musk is now in a position to attempt
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  something no one else could even contemplate.
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  A unified company, rockets, satellites, AI and possibly
• 9:34
  robotics and EVs with Tesla worth over a trillion dollars.
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  So that's him. He controls everything.
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  Now, the question isn't whether he's crazy, it's whether he's
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  crazy enough to do this. And he might tell us all
• 9:50
  sometime this week, so stay tuned.